Amazon $25bn bond sale flags limits of AI borrowing
Amazon’s record $25bn bond issue to fund AI infrastructure points to a maturing debt market where investors are growing more selective about funding the sector's immense capital requirements.
Amazon has sold at least $25bn in bonds, its largest offering of the year, to fund the massive physical infrastructure required for artificial intelligence. The eight-tranche deal spans maturities from 2029 to 2066, mixing fixed and floating rates. Proceeds will primarily flow through Amazon Web Services to build data centres and develop custom Trainium chips pitched as a cheaper alternative to Nvidia hardware.
Initial investor interest peaked at roughly $62bn, but underwriters trimmed the spreads as terms firmed up, leaving a final order book of about $41bn. That 1.6 times oversubscription marks a notably cooler reception than some previous tech offerings. Analysts note this suggests bond buyers are becoming increasingly selective as AI-linked paper floods the market.
The sale adds to a relentless borrowing sprint that has seen Amazon raise over $70bn across dollar, euro and Swiss franc markets since the start of 2025. To soothe investors watching the sector stack on leverage, Amazon explicitly told underwriters it does not plan to issue any more debt this year.
The heavy borrowing is driven by a straightforward balance sheet squeeze. Amazon has guided to roughly $200bn in capital spending for 2026, the highest of any hyperscaler, which has already compressed its free cash flow to a fraction of prior levels. The four largest US tech firms are collectively guiding to more than $650bn in AI capital expenditure this year, a sum that outstrips what their operating cash flows can comfortably cover.
Amazon’s status as one of the highest-rated corporate issuers allows it to secure ultra-long paper at low costs, creating a stark divide between it and smaller rivals. Yet the caution is already visible at the riskier end of the market. Offerings like Cipher’s junk bonds, raised to construct an Amazon data centre in Texas, are stretching investor tolerance. As Meta, Oracle and data-centre developers also crowd the market, the defining question is how much longer debt buyers will absorb this volume before demanding a steeper price.
